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Analysts' EPS and Growth Estimates
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Are these analyst's estimates in our future?
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Posted By Rip West on 11/16/2006 7:05 PM Are these analyst's estimates in our future?
No, we don't expect to provide analysts' consensus estimates. Evidence suggests Analysts' Consensus Estimates are next to useless. As Ellis Traub writes in Take Stock: David Dreman, author of Contrarian Investment Strategies: The Next Generation (Simon and Schuster, 1998), offers some statistics taken from a study of all companies followed by a minimum of four analysts-about 1,000 companies-over a 23-year period. Dreman suggests that analysts' estimates of earnings four quarters out were off by at least 5 percent 124 out of 125 times. And when the analysts were estimating five years out, the odds against their being right were 30 billion to one!
We'll be working towards generating our own StockCentral Community Consensus Estimates instead. It doesn't seem inconceivable to believe that a community of investors using a sensible investing strategy could come a whole lot closer to being right than 30 billion to one. Doug
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